All those pixels must require a lot of extra power. The battery in the iPad3 has almost 70% more capacity but the device keeps the same batter life as before.
Yes, because R&D, shipping, advertising, assembly, packaging, software development, and three years of updates is 100% free.
Come on, guys. You're perpetrating the lies that the trolls use.
I agree, the term "net" is misleading. This is about gross.
That said, we know for a fact Apple makes a boatload of net profit. But who cares? The millions of customers obviously feel the price is worth it. Apple products are very often more than the sum of their parts. You can't put a dollar amount to intangibles like user experience.
I think we can all agree that Apple makes higher margins on tablets than the other guys.
At the end of the day, thats all that really matters,.
No. To the contrary, it matters very little. What matters to the customer is how much he pays and the value that he receives for his payment. Very few customers who are queued-up at the Apple Store care on twit about gross margin. To the Apple shareholder, what matters his return on investment compared to every other potential investment. The shareholder may care more about gross margin than the customer, but not much more.
No. To the contrary, it matters very little. What matters to the customer is how much he pays and the value that he receives for his payment. Very few customers who are queued-up at the Apple Store care on twit about gross margin. To the Apple shareholder, what matters his return on investment compared to every other potential investment. The shareholder may care more about gross margin than the customer, but not much more.
Margins matter.
In 2011 HP did more revenue than Apple, yet Apple's market cap is 10X HP's. Why? Margins.
No. To the contrary, it matters very little. What matters to the customer is how much he pays and the value that he receives for his payment. Very few customers who are queued-up at the Apple Store care on twit about gross margin. To the Apple shareholder, what matters his return on investment compared to every other potential investment. The shareholder may care more about gross margin than the customer, but not much more.
Where did I say that it maters most to the customer?????
I'm assuming this 50% doesn't include overhead like marketing r&d, salaries for the engineers and designers who designed this thing? What annoys me about these articles is the masses who see it and don't really think about it or just quickly glance at the headline will think Apple is making 50% on this device. It just perpetuates the myth that Apple products are overpriced.
Where do they get the cost estimates for these components anyway?
I'm assuming this 50% doesn't include overhead like marketing r&d, salaries for the engineers and designers who designed this thing? What annoys me about these articles is the masses who see it and don't really think about it or just quickly glance at the headline will think Apple is making 50% on this device. It just perpetuates the myth that Apple products are overpriced.
Where do they get the cost estimates for these components anyway?
Check out quarterly reports of Apple and it's competitors, Apple makes much higher margins than anyone else (who also have their own R&D), so in essence, the 'value' in hardware isn't there.
Furthermore, most of the technology in Apple products is developed by ARM, LG, Samsung, Sharp and Toshiba, the software is the only truly proprietary element (the chipset, while 'designed' by Apple, is an aggregate of parts from ARM, Samsung, Qualcomm and PowerVR).
Check out quarterly reports of Apple and it's competitors, Apple makes much higher margins than anyone else (who also have their own R&D), so in essence, the 'value' in hardware isn't there.
Furthermore, most of the technology in Apple products is developed by ARM, LG, Samsung, Sharp and Toshiba, the software is the only truly proprietary element (the chipset, while 'designed' by Apple, is an aggregate of parts from ARM, Samsung, Qualcomm and PowerVR).
Hardware is only one part of the equation.
Don't forget designing the form factor, testing which battery should be used, etc. Apple doesn't usually buy off the shelf parts.
For a moment forget about the fact that this article does not consider Assembly, Shipping, Warranty, Software Development and Support, retail margins, and so many other costs.
There is a much bigger problem in this article. Based on $310 of component costs, Apple's margins should be calculated as: ($499 - $310) / $499. That way, the margins come to about 38%.
Why? If Apple makes $10 Billion of Revenues, and has $3 Billion of Profits, what would you consider Apple's margins to be? It would be $3 / $10 or 30%.
In the same way, Apple's "Revenue" is $499, and Apple's profit is $189. So their margins should be calculated as 38%.
Of course when you consider all the other costs that have been ignored by this article, the Net margins would come in a lot lower than 38%.
I would not be surprised if Apple shows a drop in margins next time around - pretty much everyone was expecting to see the prices hiked with Retina Display, Better Camera, More RAM and LTE. Apple has done a phenomenal job by keeping prices constant. Competitors who already had a tough time matching the iPad 1 and 2 on price would find it even more difficult to match the new iPad on price!
A sure sign that Tim Cook is stamping his authority over Apple. Very likely Steve Jobs would have used this opportunity to get more money - whereas Tim is going for Sales and Marketshare. Considering Apple is likely to sell every single unit it can make, and probably face dramatic shortages, maybe they should have priced it higher!
But why let the facts come in the way of a good story!? Showing a headline with 51% margins is bound to get more clicks!
For a moment forget about the fact that this article does not consider Assembly, Shipping, Warranty, Software Development and Support, retail margins, and so many other costs.
There is a much bigger problem in this article. Based on $310 of component costs, Apple's margins should be calculated as: ($499 - $310) / $499. That way, the margins come to about 38%.
Why? If Apple makes $10 Billion of Revenues, and has $3 Billion of Profits, what would you consider Apple's margins to be? It would be $3 / $10 or 30%.
In the same way, Apple's "Revenue" is $499, and Apple's profit is $189. So their margins should be calculated as 38%.
Of course when you consider all the other costs that have been ignored by this article, the Net margins would come in a lot lower than 38%.
I would not be surprised if Apple shows a drop in margins next time around - pretty much everyone was expecting to see the prices hiked with Retina Display, Better Camera, More RAM and LTE. Apple has done a phenomenal job by keeping prices constant. Competitors who already had a tough time matching the iPad 1 and 2 on price would find it even more difficult to match the new iPad on price!
A sure sign that Tim Cook is stamping his authority over Apple. Very likely Steve Jobs would have used this opportunity to get more money - whereas Tim is going for Sales and Marketshare. Considering Apple is likely to sell every single unit it can make, and probably face dramatic shortages, maybe they should have priced it higher!
But why let the facts come in the way of a good story!? Showing a headline with 51% margins is bound to get more clicks!
You're assuming that the majority of iPads sold will be the entry level model. It won't.
4G models are 629-829. A 4G chip costs about 5 dollars.
Guys, R&D and SG&A are separate line items under operating expenses in Apple's consolidated statements of operations.
These analyses within one company are valid in that they are performing the same methodology of BOM estimation to figure out COGS. Of course, you can't really compare the BOM estimate from one research firm to another (like iSuppli). However, with a side-by-side analysis from the same company, it's reasonable to say "the third generation product is slightly more expensive to make than the second-generation product."
As mentioned earlier, these companies are analyzing what's really reviewable from an outsider's perspective.
Apple doesn't break out unit sales by model, what the shareholders see are consolidated earnings. The companywide GM in Q1FY12 was 45%, so this 51% figure isn't completely out of line.
In any case, take these analyses with a grain of salt, their relevance is primarily to make relative comparisons between product generations. Other than that, I wouldn't use these guesstimates to make any judgments about how Apple runs their business.
For a moment forget about the fact that this article does not consider Assembly, Shipping, Warranty, Software Development and Support, retail margins, and so many other costs.
There is a much bigger problem in this article. Based on $310 of component costs, Apple's margins should be calculated as: ($499 - $310) / $499. That way, the margins come to about 38%.
Why are you using the costs for the LTE model but the selling price for the WiFi model?
AI was showing one model as an example. Clearly, they left things out, but at least they were considering costs and revenues for the same model.
Clearly, the margins will vary from one model to the next. I would expect margins on the base model to be lower. I would expect margins on the LTE models to be much higher (the transceiver costs $21, but they get $129 extra revenue). In addition, the models with more storage would have much higher margins (32 GB of storage only costs $16 but gets $100 more revenue than the base model. Similarly, the 64 GB costs $32 more but gets $100 more than the intermediate model.
There is another big flaw in the numbers, though. I should have pointed it out in my earlier post. Apple does not get the full retail selling price for any of these systems if they're sold through third parties. I don't know what portion Best Buy or MacConnection or anyone else gets, but you can be sure they're not selling them for free. So Apple's revenues are substantially less than the numbers being thrown around (if I had to guess, I'd guess that the retailer gets 10-15%, but I don't know).
It sounds like you're saying the cellular option for the iPad only costs Apple $5. If so can you defend that. If not, can you clarify your meaning?
My bad, went a little overboard with the hyperbole. A Qualcomm MDM9600 chip costs 40 dollars, including licensing. Generic 3G chips are around 5 dollars.
Comments
China Telecom Begins Selling iPhone 4S After Receiving 200,000 Pre-Orders
http://www.cultofmac.com/151772/chin...00-pre-orders/
netting Apple 51% margins
Can you net a gross margin?
Margins down 2%? Does this mean Apple is faltering under Cook and we should all sell our stock¡
Can you net a gross margin?
NO, I think you have to use a gig. They're way too big for most nets.
Yes, because R&D, shipping, advertising, assembly, packaging, software development, and three years of updates is 100% free.
Come on, guys. You're perpetrating the lies that the trolls use.
I agree, the term "net" is misleading. This is about gross.
That said, we know for a fact Apple makes a boatload of net profit. But who cares? The millions of customers obviously feel the price is worth it. Apple products are very often more than the sum of their parts. You can't put a dollar amount to intangibles like user experience.
I think we can all agree that Apple makes higher margins on tablets than the other guys.
At the end of the day, thats all that really matters,.
No. To the contrary, it matters very little. What matters to the customer is how much he pays and the value that he receives for his payment. Very few customers who are queued-up at the Apple Store care on twit about gross margin. To the Apple shareholder, what matters his return on investment compared to every other potential investment. The shareholder may care more about gross margin than the customer, but not much more.
No. To the contrary, it matters very little. What matters to the customer is how much he pays and the value that he receives for his payment. Very few customers who are queued-up at the Apple Store care on twit about gross margin. To the Apple shareholder, what matters his return on investment compared to every other potential investment. The shareholder may care more about gross margin than the customer, but not much more.
Margins matter.
In 2011 HP did more revenue than Apple, yet Apple's market cap is 10X HP's. Why? Margins.
No. To the contrary, it matters very little. What matters to the customer is how much he pays and the value that he receives for his payment. Very few customers who are queued-up at the Apple Store care on twit about gross margin. To the Apple shareholder, what matters his return on investment compared to every other potential investment. The shareholder may care more about gross margin than the customer, but not much more.
Where did I say that it maters most to the customer?????
Estimate is so much nicer than "made up."
I might need to borrow your aluminum-router, but I’ll give it back on Monday. Tuesday at the LATEST.
And can I have the software free? Thanks, bud! You just sold an iPad—without a dime of advertising needed!
Where do they get the cost estimates for these components anyway?
I'm assuming this 50% doesn't include overhead like marketing r&d, salaries for the engineers and designers who designed this thing? What annoys me about these articles is the masses who see it and don't really think about it or just quickly glance at the headline will think Apple is making 50% on this device. It just perpetuates the myth that Apple products are overpriced.
Where do they get the cost estimates for these components anyway?
Check out quarterly reports of Apple and it's competitors, Apple makes much higher margins than anyone else (who also have their own R&D), so in essence, the 'value' in hardware isn't there.
Furthermore, most of the technology in Apple products is developed by ARM, LG, Samsung, Sharp and Toshiba, the software is the only truly proprietary element (the chipset, while 'designed' by Apple, is an aggregate of parts from ARM, Samsung, Qualcomm and PowerVR).
Check out quarterly reports of Apple and it's competitors, Apple makes much higher margins than anyone else (who also have their own R&D), so in essence, the 'value' in hardware isn't there.
Furthermore, most of the technology in Apple products is developed by ARM, LG, Samsung, Sharp and Toshiba, the software is the only truly proprietary element (the chipset, while 'designed' by Apple, is an aggregate of parts from ARM, Samsung, Qualcomm and PowerVR).
Hardware is only one part of the equation.
Don't forget designing the form factor, testing which battery should be used, etc. Apple doesn't usually buy off the shelf parts.
There is a much bigger problem in this article. Based on $310 of component costs, Apple's margins should be calculated as: ($499 - $310) / $499. That way, the margins come to about 38%.
Why? If Apple makes $10 Billion of Revenues, and has $3 Billion of Profits, what would you consider Apple's margins to be? It would be $3 / $10 or 30%.
In the same way, Apple's "Revenue" is $499, and Apple's profit is $189. So their margins should be calculated as 38%.
Of course when you consider all the other costs that have been ignored by this article, the Net margins would come in a lot lower than 38%.
I would not be surprised if Apple shows a drop in margins next time around - pretty much everyone was expecting to see the prices hiked with Retina Display, Better Camera, More RAM and LTE. Apple has done a phenomenal job by keeping prices constant. Competitors who already had a tough time matching the iPad 1 and 2 on price would find it even more difficult to match the new iPad on price!
A sure sign that Tim Cook is stamping his authority over Apple. Very likely Steve Jobs would have used this opportunity to get more money - whereas Tim is going for Sales and Marketshare. Considering Apple is likely to sell every single unit it can make, and probably face dramatic shortages, maybe they should have priced it higher!
But why let the facts come in the way of a good story!? Showing a headline with 51% margins is bound to get more clicks!
For a moment forget about the fact that this article does not consider Assembly, Shipping, Warranty, Software Development and Support, retail margins, and so many other costs.
There is a much bigger problem in this article. Based on $310 of component costs, Apple's margins should be calculated as: ($499 - $310) / $499. That way, the margins come to about 38%.
Why? If Apple makes $10 Billion of Revenues, and has $3 Billion of Profits, what would you consider Apple's margins to be? It would be $3 / $10 or 30%.
In the same way, Apple's "Revenue" is $499, and Apple's profit is $189. So their margins should be calculated as 38%.
Of course when you consider all the other costs that have been ignored by this article, the Net margins would come in a lot lower than 38%.
I would not be surprised if Apple shows a drop in margins next time around - pretty much everyone was expecting to see the prices hiked with Retina Display, Better Camera, More RAM and LTE. Apple has done a phenomenal job by keeping prices constant. Competitors who already had a tough time matching the iPad 1 and 2 on price would find it even more difficult to match the new iPad on price!
A sure sign that Tim Cook is stamping his authority over Apple. Very likely Steve Jobs would have used this opportunity to get more money - whereas Tim is going for Sales and Marketshare. Considering Apple is likely to sell every single unit it can make, and probably face dramatic shortages, maybe they should have priced it higher!
But why let the facts come in the way of a good story!? Showing a headline with 51% margins is bound to get more clicks!
You're assuming that the majority of iPads sold will be the entry level model. It won't.
4G models are 629-829. A 4G chip costs about 5 dollars.
These analyses within one company are valid in that they are performing the same methodology of BOM estimation to figure out COGS. Of course, you can't really compare the BOM estimate from one research firm to another (like iSuppli). However, with a side-by-side analysis from the same company, it's reasonable to say "the third generation product is slightly more expensive to make than the second-generation product."
As mentioned earlier, these companies are analyzing what's really reviewable from an outsider's perspective.
Apple doesn't break out unit sales by model, what the shareholders see are consolidated earnings. The companywide GM in Q1FY12 was 45%, so this 51% figure isn't completely out of line.
In any case, take these analyses with a grain of salt, their relevance is primarily to make relative comparisons between product generations. Other than that, I wouldn't use these guesstimates to make any judgments about how Apple runs their business.
4G models are 629-829. A 4G chip costs about 5 dollars.
It sounds like you're saying the cellular option for the iPad only costs Apple $5. If so can you defend that. If not, can you clarify your meaning?
For a moment forget about the fact that this article does not consider Assembly, Shipping, Warranty, Software Development and Support, retail margins, and so many other costs.
There is a much bigger problem in this article. Based on $310 of component costs, Apple's margins should be calculated as: ($499 - $310) / $499. That way, the margins come to about 38%.
Why are you using the costs for the LTE model but the selling price for the WiFi model?
AI was showing one model as an example. Clearly, they left things out, but at least they were considering costs and revenues for the same model.
Clearly, the margins will vary from one model to the next. I would expect margins on the base model to be lower. I would expect margins on the LTE models to be much higher (the transceiver costs $21, but they get $129 extra revenue). In addition, the models with more storage would have much higher margins (32 GB of storage only costs $16 but gets $100 more revenue than the base model. Similarly, the 64 GB costs $32 more but gets $100 more than the intermediate model.
There is another big flaw in the numbers, though. I should have pointed it out in my earlier post. Apple does not get the full retail selling price for any of these systems if they're sold through third parties. I don't know what portion Best Buy or MacConnection or anyone else gets, but you can be sure they're not selling them for free. So Apple's revenues are substantially less than the numbers being thrown around (if I had to guess, I'd guess that the retailer gets 10-15%, but I don't know).
It sounds like you're saying the cellular option for the iPad only costs Apple $5. If so can you defend that. If not, can you clarify your meaning?
My bad, went a little overboard with the hyperbole. A Qualcomm MDM9600 chip costs 40 dollars, including licensing. Generic 3G chips are around 5 dollars.